What is Financial Inclusion ? :
What is Financial Inclusion ? delivery of banking services at an affordable cost to the vast sections of disadvantaged and low income groups.
The objective is to ensure availability of banking and payment services to all sections of our population without discrimination.
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Why Financial Inclusion is required ? :
Why Financial Inclusion is required ? Financial exclusion is harmful; it results in :
Reduction in income generating opportunities.
Increased travel requirements.
Higher incidence of crimes.
General decline in investments.
Difficulties in gaining access to credit.
Recourse to private money lenders at exorbitant rate of interest.
Increased unemployment.
Inconvenience to small business.
Difficulties in cash remittance.
Social / Economic exclusion.
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Financial Inclusion – Indian Scenario
Bank Nationalisation
Creation of RRBs
Paradigm shift from class banking to mass banking.
No.of branches increased from 8321 in 1969 to 68282 as on 31.03.2005
Average population per branch decreased from 64000 to 16000.
There are still under banked States.
Features in Financial Inclusion :
Features in Financial Inclusion State driven intervention
Statutory enactments
Voluntary efforts of banks
Huge / expanded branch network
Focus on credit apart from deposits
Priority sector lending norms
Interest rate directives
Implementation of subsidy linked credit programmes.
Financial services have reached the poor to a greater extent
Still enormous scope / potential exists
RBI’s Recent Initiatives :
RBI’s Recent Initiatives Directives towards financial inclusion.
Focus on zero / minimum balance, no-frill accounts.
Forging links with micro finance institutions and local communities.
Use of MFIs, CSOs, SHGs, NGOs as financial intermediaries.
Concept of business facilitators and bank correspondents.